The Medicare donut hole is catching countless seniors unaware

As we get older taking prescription drugs is a fact of life and the costs of these drugs continue to skyrocket.

In simpler times retirement planning was less complicated than it is for us today. There were more defined benefits retirement plans that provided you with a steady pension, and income growth was more pronounced.

That’s not the world we live in today

While we will likely be on a fixed income, many of our day to day costs are not fixed. The result is retirees are often scrambling to balance the cost of everyday living and the increasing costs of prescription drugs on a fixed income.

Prescription Drug Costs Doubled in Just 7 Years – one-year supply of some meds tops $11,000

What is the Medicare “donut hole”?

You pay 100% of your drug costs until you reach the $310 deductible amount.

After reaching the deductible, you pay 25% of the cost of your drugs, while the Part D plan pays the rest, until the total you and your plan spend on your drugs reaches $2,800.

Once you reach this limit, you have hit the coverage gap referred to as the “donut hole,” and you are now responsible for the full cost of your drugs until the total you have spent for your drugs reaches the yearly out-of-pocket spending limit of $4,550 (the equivalent of a $375 car payment).

After this yearly spending limit, you are only responsible for a small amount of the cost, usually 5% of the cost of your drugs.

You may have read in the 2010 Medicare & You Handbook that there are some Medicare Part D plans that offer coverage in the donut hole—but these plans may charge a higher monthly premium.

Whether you pay the higher premium for Medicare or cover the “donut hole” out of pocket the end result is less money each month to meet everyday expenses. For seniors on fixed incomes prescription drugs are becoming an even greater financial burden.

The New Reverse Mortgage isn’t for everyone…but it could be!

If you’re still wondering if a Reverse Mortgage is the right solution for you but you’re not ready to sit down with one of our Reverse Mortgage Experts, then we’ll be happy to mail (or email) you Use Your Home to Stay at Home which is the official federally approved consumer booklet for those considering a reverse mortgage.

Some of this information first appeared in the April 2016 AARP Bulletin and on the Medicare Blog